(TRENTON) – A new law sponsored by Assemblywomen Bonnie Watson Coleman, Mila Jasey and Elease Evans strengthens the notification requirements for tenants living in a foreclosed property.
“Many tenants may not even know what rights they have when their building changes hands due to a foreclosure,” said Watson Coleman (D-Mercer). “We needed to close that information gap. Tenant families need the peace of mind that comes from fully understanding their rights and knowing they will not lose their home because of a foreclosure.”
Under the new law (A-4063 from the 2008-09 legislative session), buyers of a foreclosed residential property are required to notify tenants of the ownership change and that they are not required to vacate.
Similarly, creditors engaged in an ongoing foreclosure proceeding are required to include a notice to residents that a foreclosure action has been initiated and that the ownership of the property may change, but that tenants are not required to vacate the premises in the event of a foreclosure.
Buyers of a foreclosed property also are prohibited from engaging in any communication designed to persuade a tenant to vacate the property unless they make a bona fide monetary offer. Any acceptance of such an offer will be contingent upon the tenant having at least five business days to review its terms in writing, and by providing a signed acceptance. Violators will subject to either triple damages or a penalty of $2,000 plus attorney fees.
“No tenant should be forced or coerced out of their home when a building changes hands during a foreclosure,” said Jasey (D-Essex). “And if an owner wants to provide a financial incentive to a tenant, that offer must be made above-board.”
The law also makes administrative changes to the Mortgage Stabilization and Relief Act enacted earlier this year. First, it requires a creditor in a foreclosure action to notify the clerk of the municipality in which the property is located within 10 business days of initiating a foreclosure proceeding.
The notice will include the name and contact information for the creditor representative responsible for handling complaints related to property maintenance.
Also, any creditor with a residential foreclosure proceeding before a Superior Court will be required to provide the clerk of the municipality in which the property is located a listing of all residential properties in the town that that creditor has a foreclosure action pending.
“Foreclosures don’t only impact a single family, they also can impact an entire neighborhood or overwhelm even a small town,” said Evans (D-Passaic). Creditors in a foreclosure proceeding may think they have a responsibility just to their own financial interest, but they also have an obligation to the greater community to ensure a property does not become an eyesore or safety hazard.
The bill was signed into law on Jan. 11 by then-Gov. Jon S. Corzine.
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